Dealer invoice question

I'm dealing on a new car and every dealer talks about their dealer invoice price. They are trying to make me think this is what they are paying for the car from factory. Is this true or am I to think they have more margin than they are letting on to? Thank you all.

I know a few years ago when I was new car shopping you could go to Kelly Blue Book (kbb.com) and get the price the dealers are paying. Gives you some advantage anyhow.

Ben

If you offered the dealer cash (real green money) at the invoice price and took the offer, it it would be clear that the invoice is a tool. Today the answer is: will you sell the car to me for this price or not? If there is no point of acceptance there is no deal. All other arguments of reductions are moot. If you offer too much, the dealer will take it. never include a trade in, they complicate both your thinking and their greed. It makes a quadratic equation out of simple math. Jim

Invoice price is accurate. This is exactly what the dealer has to pay for the car, but there is a thing called holdback. This is money the manufacturer will pay to the dealer. On most new cars today, that amount is 5% of sticker. If car sticker is $30,000.00, the holdback is $1500.00. This is the amount most dealers are shooting. And the dealer doesn't get rich with all of today's overhead.

I just bought a new car. Told the guy I was paying cash. He said they would rather have me finance the thing cause they make money on the financing...he had just put a lady with bad credit in a used cadillac for 16% interest....

invoice is never the actual cost. forget it.
There are always various bonuses, and dealer cost maybe 5k or more below invoice. Pay what you want for the car, and get a fair price for your trade.
Dealer add-ons and dealer financing are usually very bad. Anytime a seller tells you what he paid, he is lying. The buyer is always in control.

The wife and I just bought a new Ford Escape 3 weeks ago.
It was $23,300 out the door. We financed $17k for 3 years at 0 % interest. I like riding on Ford's money cause they have billions more then I ever will. We traded in the old car to the Ford dealer.

I was told that the dealer invoice is (the price you see on the paperwork from the manf.) is about 5-10 % more then what the dealer paid for the car/truck.
The banks are in bad shape cause of the housing mess, but they cant give out car loans cause I can get the money for 0 interest and the banks lose out.

Usually if you take the free financing the price is higher on the car,so your still paying hidden interest.Also they will make money on the car you traded in,so i don't know about that "riding on fords money" thing.

The last two new trucks i bought i paid a little less than half the sticker price. I paid cash @ no trade in.

The Banks lose out.. that would have to be a 1st.

There's the invoice price, somewhere below that is the price that the dealer will say he paid for the car, and somewhere below that is what the dealer actually paid for the car. There are all kinds of secret arrangements between the company and the dealer that very few people are in on.

They may talk about it but do they actually show it?

I'd compare dealer invoice with a couple of dealers just to see if they are honest. They should be the same. Large dealers can give a better deal because they get bonuses if they sell more cars. Even Dave Smith Motors in Idaho (the largest Dodge dealer in the world and largest GM dealer in the west) has sold to me below "dealer invoice", and I know they are still making money....just not as much.

Look at the building housing the dealership.

I'm all for a company making a profit, but when the place looks like something out of a Star Wars show, I'm suspicious of everything they tell me. . .

Paul

Ex: Sticker on my truck was 54900. They reduced to 41500, I paid 31900 for it. Invoice showed 46700. Invoice is NOT what they paid for it!

What the Dealers don't tell you is thet they would rather finance the car . they get points from the finance co Can amount to a persentage of interist you pay 1000 to 2500 per car

We got a $1000 rebate AND 0% interest financing. Yippie !!!!

Go to www.Edmunds.com. Tells you prices and how to buy a car. Got my last one $400.00 over their cost. If that"s not enough for them, walk out. It"s a buyers market. Have a Goodun.

All of the numbers that you see are inflated. They are there to begin the well proven process of establishing a price in the buyer's head. It is the tried and true "elevator" sales scheme. All of the TV infomercials use it. They start off at a price, then they drop the price or cut a payment. What they are really saying is that the item was never worth what they started at. Same is true with new vehicles.
In order for you to feel like you got a "deal", you have to be convinced that it is worth more than you paid, in reality, it is worth less than your lower price that you worked so hard to negotiate. Want proof? Any reputable car person will tell you that the value drops about 20% as soon as you drive off the lot. That is simply the profit that the dealer and car companies place in their pockets. All of the drama about seeing if the boss will "approve the deal" and stuff is reheared. In some cases, the sales person leaves the room but never talks to the boss. They already know what to say. br>The MSRP is inflated beyond imagination. Anyone that ever pays MSRP needs to either have their head examined, or give some of their extra money to me.
Dealer Invoice is just a reduced inflated number from the inflated MSRP. If a dealer paid that much for each unit, they would be under water in no time.
It is games, games, games.
They pay less than any number that they are going to show you. On top on that, based on the floor plan that they on and how many units they sell per period, they get even more money as incentive to move more units. They also get other funds such as co-op advertising money that they can use any way they wish.
Even with the slow down, any dealer still moving units is making more than you would even imagine.
Car dealers have one of the longer running sales schemes in the world. It has been exposed many times, and people still keep falling for it.
Their dream buyers are ones that want to know "how much is it a month"? Are you kidding me? Or, the ones that want to "reestablish" their credit.
Other dream buyers are the ones that are foolish enough to trade in a good vehicle. Trade in's make more money than new cars in many cases. They can show you inflated numbers on what they are "giving" for yours, because they just pull it out of the other side of inflated money.
Some of them went out of business when the market dropped, not because they were not still making money, but because they suddenly had to try to live on a few less million a year. What a shame to have to get by on several million a year and have give up your private jet and a few homes.
A starting point is to take Dealer Invoice with nothing added to it and deduct atleast 12%. It varies based on vehicle and options but this is a good rule. The dealer makes some profit (which they deserve) and you do not get raped like many car buyers still do.
Just remeber, any company that will price pin stripes as a $150 add on is INFLATING the numbers.
Don't pay for add on's such as paint sealer, undercoating, fabric protector, etc. These are extremely over priced and high profit centers that you did not order. If they are already on the vehicle, "HATE IT".

gun,

I am not saying that you did not get a good deal, but think about it. Are they truly giving you "free" interest? If so, why not free options, upgrades, or gasoline too? They all have a price.
The price of free or reduced rate interest is simply buried in the total price.
Take a closer look at the ads. They say "either 0 percent interest or XX amount off". We can't have both because that XX amount off is what is paying the interest that we thought we got for nothing. They would go out of business borrowing and loaning money for "0". I am surprised (not really) that some truth in leading act has not banned them from saying that it is "free" interest.
It is the same with anything "free" that they claim, it is simply bait to catch the fish.
I guess the fish figure the bait is free too, but look at the price that they actually pay. LOL

bob, Listen to the others here, Do not buy yet IMO. Go home, do your home work on what sticker is on the rig you are looking to buy.
Or better yet, tell tell the salesman you want to "Special Order" one just the way you want it. That will get it to cost that way. But the dealers still make a killing anyway you figure it. A deal to be had is ask if they have any Lease/Program cars/trucks that will be due in shortly. It will have 20K or so on it and the initial depreciation has all ready happened. Just a thought. Go do some Homework, or serious pricing around.
Also buying at the end of the month helps for the dealers have to keep numbers running through the dealership to have units to sell next month
Hope this helps.
Later,
John A.

I am a Sales Manager at a new car dealership. Invoice minus holdback is the true dealer cost on any car in a dealerships stock. Holdback is 3% of the invoice. So if you buy a $30000 car, the dealer just made $900. That's not much folks. Guarantee cars have the lowest profit margin around. Granted they cost a lot of money but really, what's wrong with making $900 on a $30000 car? Why are people so against others making a little money. Nobody complains about Convience stores and their 500-1000% markups.

Dave

730, you obviously have some strong digust for car dealer. How do you feel about your local farm store. How about your favorite restraunt? You know their profit margin is extremely higher than all car dealers, right?
You are right when you say that all the manufacturer is doing when they give you 0% interest is buying down your rate with the rebate. Do you realize though that in many cases the customer saves a ton of money by taking it though? What about the guy who wants a $45000 truck but has to finance for 60 months. Even compared to a great rate of 3.5%, this guy will save more money over the 5 years he makes payment than he would have by taking a $4500 rebate. Dave